City braces for impacts of new housing laws

About 13 percent of land in Palo Alto is eligible for housing projects that can go under an expedited approval-process through Senate Bill 35, a new law going into effect on Jan. 1, 2018. Weekly file photo.

For Palo Alto's housing advocates, the broad package of bills that Sacramento lawmakers signed into law this fall are exactly the type of disruption that the city needs after years of sluggish residential construction and a deepening crisis of affordable housing.

The 15 bills, which sailed through the state Legislature in September and then signed into law by Gov. Jerry Brown, create a streamlined approval process for residential developments; make it harder for municipalities to reject housing proposals on subjective grounds; and pave the way for a $4 billion housing bond that will go to the voters in 2018.

They also require cities to approve accessory-dwelling units in all single-family residential zones; ensure that inclusionary-zoning requirements apply to residential developments, including rental properties; and make it harder for cities to dance around their regional housing requirements.

But for the Palo Alto City Council, which has made housing one of its top priorities for the year, the Sacramento-administered medicine comes with a host of unpredictable side effects. The new laws could upend the city's policies on everything from parking requirements to architectural reviews. And with the new laws kicking in on Jan. 1, City Hall staff are scrambling to understand the implications and come up with new procedures and policies to address them.

Perhaps the most transformative bill in the bunch is Senate Bill 35, known as the "by right" housing bill. Authored by state Sen. Scott Weiner, D-San Francisco, the bill would apply to jurisdictions that have not been issuing enough building permits to satisfy their regional housing allocations for various income categories.

Though the state Department of Housing and Community Development hasn't yet determined which agencies will be subject to the bill, city officials are expecting Palo Alto to be among them, a memorandum from Planning Director Hillary Gitelman and City Attorney Molly Stump indicates. That's because based on data through 2016 (which covers the first two years of the 2014-2022 planning cycle), the city has only issued permits for 16 percent of its allocation for market-rate units (310 total units) and 8 percent of its allocation for affordable-housing units (121 total).

In cities that fall short of the housing goals, as determined by Regional Housing Needs Assessment, Senate Bill 35 creates a streamlined approval process for multifamily residential projects that meet certain criteria. The projects must be located in zones that allow residences, have at least two units and be consistent with "all objective zoning standards." The bill also bars cities from adopting laws to prevent a project's eligibility for the streamlined review.

Under SB 35, cities have 60 days to determine whether a project is eligible for streamlining and then an additional 30 days to review the project, with a focus only on "objective criteria."

"In some ways, SB 35 is a game-changer for multifamily housing development in Palo Alto because of its potential to influence the size and location of multifamily housing applications that the city receives," the memo from Gitelman and Stump states.

The memo notes that large projects requiring local legislative action (e.g. rezoning) or design exceptions will still have to go through the city's regular process, which gives council members wide discretion to approve or deny them. But more than 13 percent of the land in Palo Alto has zoning designations that could accommodate housing, and "property owners in these areas could choose to shape their proposals to be eligible for streamlined review," the memo states.

As an example, staff considered a scenario in which a developer seeks to build a mixed-use project on El Camino Real, with housing over ground-floor retail. As long as residential use makes up 75 percent of the project, it would qualify for a streamlined review. One project of this sort was recently approved at 3877 El Camino Real, the former site of the Compadres Bar and Grill. The new three-story development will include 11 townhouses and six condominiums, along with about 4,000 feet of commercial space.

The law could also have major ramifications for Stanford Research Park, where zoning allows some residential space. Even though the density of residential development is capped by a floor-area-ratio of 0.4 to 1 (the built square footage can only be 40 percent of the site's area), the large size of the parcels in the Research Park could lead to many new units getting approved "by right."

Currently, the city requires developers to receive use permits for residential projects in the Research Park. The new law, Gitelman said, would prevent the city from requiring these permits, provided the project meets the bill's qualifications.

Another significant change is an update to the Housing Accountability Act, which limits a city's ability to deny a zone-compliant housing project or to require less density even though it falls under the zoning maximum. Two bills, Assembly Bill 678 and Senate Bill 167, both raise the burden of proof for local agencies that reject housing projects. Another, Assembly Bill 1515, requires courts to give less deference to cities in rulings on zoning consistency.

"All three of these bills would strengthen existing provisions in the law and increase penalties for non-compliance, making it much more difficult for the city to disapprove or reduce the number of units in a housing project," the memo states.

For the City Council, the new bills could significantly shift the community conversation about housing, Mayor Greg Scharff said at Monday night's council meeting. The council's recent debates as to whether the city should plan for 3,000 or 10,000 housing units in the new Comprehensive Plan could become moot under the new rules, which could force the city to approve more housing units than it planned to.

"If you're talking about changing the community, this has the potential to do it," Scharff said.

Some of these changes can be very positive, he said. The new laws, for instance, can spur a housing boom in downtown, California and El Camino Real -- areas that the council believes are particularly suitable for the development. At the same time, the pace of development could be faster than what residents are accustomed to, he predicted.

"When you talk about changing the character of the community and having rapid change -- this is the kind of thing that can actually achieve it in a way that could be very different from the kind of stuff we talk about," Scharff said.

Several council members, including Cory Wolbach and Tom DuBois, lamented the diminishment of local control under the new state bills even as they praised the new legislation for addressing a problem that council members have been struggling to solve. DuBois said the focus on "affordable housing" is particularly positive.

Council members have been "wishy-washy" in defining what the term means, he noted. Under the new state requirements, devising a single definition is moot, as municipalities will be required to make progress on new homes in each income category.

SB 35 isn't the only new law that tracks a city's progress on meeting its regional allocation. The package of legislation also includes three Assembly bills -- 879, 1397 and 72 -- that concern themselves with the Housing Element, the state-mandated document that each city has to approve detailing its plans for encouraging housing construction and listing potential housing sites.

The new laws require cities to file annual reports on their housing progress, track whether cities are acting consistently with their Housing Elements (and potentially revoke the certification of the documents for those agencies that aren't) and make it difficult for cities to list already developed sites on their housing inventories.

DuBois wanted to add even more clarity by recommending that the council establish its own specific target for the percentage of new housing units that should be designated for low-income residents.

"I think it's going to take that kind of focus in our area if we're really serious about affordable housing," DuBois said.

His proposal did not, however, sway the majority. Some council members, including Scharff and Vice Mayor Liz Kniss, suggested that creating new local requirements would be premature at this point. City staff are already drafting a new work plan for possible code revisions to encourage more housing development -- an effort that was sparked by a recent colleagues' memo from Councilman Adrian Fine, Kniss and Wolbach.

Kniss noted that for all the talk about encouraging the construction of affordable housing in recent years, there has been little action on that front.

Until the council actually votes to approve an affordable-housing project, Kniss said, she will not believe that her colleagues are serious about providing affordable housing.

Posted by Mark Michael
a resident of Community Center
on Dec 6, 2017 at 8:12 am

One narrow aspect of SB 35 is noteworthy, namely: "The projects must be ... consistent with "all objective zoning standards." Conversely, the legislation will "make it harder for municipalities to reject housing proposals on subjective grounds."

Balancing the overall community needs with individual property owner rights and obligations is a serious matter. However, this is best done with reference to objective standards.

Now that the long-delayed revision of the Comp Plan is finally done, Council and staff should prioritize revisions to the zoning code and other regulations affecting building permits. Updated, objective standards will foster an appropriate balance between community impacts and land use practices that will be consistent with the overall vision.

Posted by Resident
a resident of Barron Park
on Dec 6, 2017 at 9:32 am

One of the most noteworthy comments from the council discussion Monday came from Wolbach. He claimed that he had been opposed to recent state legislation mandating that cities adopt a series of changes to ADU's which went beyond the changes Palo Alto was already proceeding with. However, he was actually part of the council majority who supported PA then going way beyond the new state requirements.
Whether one thinks this was good policy or not, our elected officials should not be allowed to engage in such bold dishonesty. We get enough of that from the president these days. Local politicians should not be allowed to get away with the same here.

Y'all are complaining about kickbacks to developers and local corruption? Give me a break. The cheapest home for sale in Palo Alto today (on Zillow) is 1.49 million dollars. Home owners and landlords are getting rich and twisting the approval process to prevent the rest of us from getting anything. Compadres has stood vacant and an eyesore for almost a decade. Its high time the State slapped down local officials who block any development. You want to live in a small, quiet town? Take your million and half and go. The average home value in America is 250k, you can find a nice place just about anywhere else. There are great jobs in Palo Alto, an amazing University, and a bunch of people who want to build a better future. Stop trying to shut us out.

Posted by Resident
a resident of Crescent Park
on Dec 6, 2017 at 12:30 pm

@Student:
"There are great jobs in Palo Alto, an amazing University, and a bunch of people who want to build a better future. Stop trying to shut us out."

Palo Alto was already great. Read what musical writes above:
"13 percent of the land in Palo Alto? Ostensively that's 2000 acres. At RM-40 it's 80,000 units. Upwards of $80 Billion in sales? 160,000 more residents at double-occupancy."
Assume some of those additional residents also have kids to flock to the public schools.
You still think Palo Alto will be the place where you want to build a better future? Even with a quarter of that expected new residents, this will be a less sustainable place to live.

Absolutely, and that's why people chose Palo Alto. Then Big Tech came along and took over, and now is telling us we have no right to have our small town and we need to leave? No one's going to simply let themselves be bullied like that.

Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Dec 6, 2017 at 1:09 pmOnline Name is a registered user.

"Y'all are complaining about kickbacks to developers and local corruption? Give me a break. The cheapest home for sale in Palo Alto today (on Zillow) is 1.49 million dollars. Home owners and landlords are getting rich and twisting the approval process to prevent the rest of us from getting anything."

@Student, how are homeowners who plan to stay here getting rich?? We're living here, paying our property taxes, paying our other taxes and paying our mortgages. And pretty soon we'll be paying some of those taxes and expenses TWICE thanks to the national corruption and gerrymandering and fake news giving us the new tax plan.

@Student, give me a break. The landlords and the developers and the real estate speculators and foreign "investors" and their enablers are totally different stories so direct your anger at them, not the people paying taxes for your education!

Posted by Commonsense
a resident of Barron Park
on Dec 6, 2017 at 1:10 pm

@Anke - hahaha! Nobody’s going to get bullied? Yes you will. It happening now, has happened since the terrible technologists Hewlett and Packard took the first step in “destroying” “our” town many years ago and it will continue, maybe for another 100 years or more. Like it or not this place is ever changing. I love/embrace change so will stick around and enjoy myself. Good luck with misery!

Posted by Cecilia Willer
a resident of Professorville
on Dec 6, 2017 at 1:18 pm

I have to agree with the comments indicating that we live here to have a small town feel. Yes the prices are high to live here and the people who live here want to have a small town feel. Yes the prices should go down and NO there should not be more development. That is not the answer. It is already so congested here and parking is crazy. The only development should be more parking for all these companies who choose to locate in downtown Palo Alto and like to park in front of people's homes.

Posted by resident239
a resident of Professorville
on Dec 6, 2017 at 2:04 pmresident239 is a registered user.

I used live in SF and work in PA. I drove to work and parked downtown and drove home every day. Now I rarely use my car. House more people closer to where they work and it will help the traffic and parking problem. Hoping for a small town feel with less people, forever, because you want it is not helpful and ignores reality.

Posted by Long Time Resident
a resident of Old Palo Alto
on Dec 6, 2017 at 2:27 pm

Some of our cities in Northern California like Chico, Redding, Yreka, Eureka, Crescent City, and Mt. Shasta need businesses and people. They have space, water, and existing infrastructure which can be expanded.
People don't need to keep concentrating here.
Big companies should consider relocating their headquarters there.
Some younger tech grads have already relocated out-of-state, and have started their companies there. They initially came back here for some funding help, but did not want to live around here. The places where they chose to live have more space, and less traffic for their employees, and relatives too.
And food and hotels are much better and affordable.
Due to our high cost of living, we have lost many great people.
A glut of ghost homes, and long term home renters don't make a nice community since these people know that they are only here temporarily. They don't really care about getting involved too deeply in anything, since they know this can't be their city.

Posted by jane
a resident of Another Palo Alto neighborhood
on Dec 6, 2017 at 2:47 pm

Palo Alto's required share" of bay area housing is mandated by ABAG requirements, based on the number of jobs we have and are going to create in Palo Alto based on all the development that has been given the go ahead by the city council majority over the next decade in the new Comprehensive Plan. That includes the jobs in Stanford's Research Park and shopping center, which are within Palo Alto. Not sure if the new hospital expansion is within Stanford's county lands or within the city of Palo Alto.

Presume that any new jobs created on campus that are within the county's boundaries, not Palo Alto's, will count toward the ABAG allocation of housing Stanford must provide. Or because it is Stanford land and they are the "developers" does that mean they are not affected by the ABAG housing requirements and these new laws?

Posted by Commonsense
a resident of Crescent Park
on Dec 6, 2017 at 2:50 pm

Again, more burying your head in the sand and hoping it goes away. Some people will obviously choose to move elsewhere but many more will move here. Let’s densify what we have already sacrificed/paved over before we pave over the rest of the state. Leave beautiful northern CA alone!

Posted by Jane
a resident of Another Palo Alto neighborhood
on Dec 6, 2017 at 2:58 pm

The Palo Alto Unified School District is still, as far as I know, a "Basic Aid" school district. That is, when the State changed the ways schools were funded to centralize and equalize how each district was funded, towns could opt out and keep their own property taxes rather than be allocated a $ amount from this new central fund for each new student enrolled. In other words, for each new child enrolled in the Palo Alto Unified School District the pie gets cut smaller not larger. Will all these new apartments, townhouses, condos, provide enough additional property tax to cover the children who will be educated in the local schools, or will the pie keep being cut smaller and smaller? What will that do to class sizes? Will the school district have to rebuild the schools so they are multi-story, and if so will that be funded by bonds added to our property taxes?

Posted by john_alderman
a resident of Crescent Park
on Dec 6, 2017 at 3:11 pmjohn_alderman is a registered user.

@resident239 "I used live in SF and work in PA."

I used to live AND work in SF. Now I live in PA because supposedly the schools are good (that's another story). Build a bunch of housing in Palo Alto, and a bunch more of my co-workers will move down here and commute up to SF. It is the best of both worlds, safe home and schools, and vibrant culture during the day! For person like you, there will be several new commuters. Maybe they will be going to SF, maybe SJ, maybe just driving down to google in MV. But it is going to be more and more cars on already congested roads. So please, stop with the delusion that building more is going to reduce traffic, reduce pollution, reduce commuting, fix parking.

Here is a simple thought experiment for you.

Imagine we reduce the housing and population in Palo Alto by 50%. Do you think traffic & parking would be better or worse?

Imagine we increase the housing and population in Palo Alto by 50%. Do you think traffic & parking would be better or worse?

So I roll my eyes whenever a member of the church of urbanism says we need to build our way our way of the traffic and parking problem.

Posted by Gale Johnson
a resident of Adobe-Meadow
on Dec 6, 2017 at 4:52 pmGale Johnson is a registered user.

When we first moved here in 1961, Palo Alto had what people are now calling the feeling of a town, but it really had a feeling to us then, of not a town, but as one of the few cities in Montana that we were familiar with. Great Falls (population 50,000) was the closest one to my real town...Power, a small farm town, population 170 at that time. It had a consolidated school system, elementary thru high school (kids were bused in from all directions), 2 bars, 3 churches, grain elevators, a little grocery store, post office, and a few other stores related to farm supplies. No paved streets. Now that's a real Montana town. Okay, enough of my youthful nostalgia of what a town meant to me back then.

We came here for my job opportunity with Philco's Western Developmental Laboratories on Fabian Way, not because Palo Alto was a nice town. But after 2 1/2 years of renting a duplex at 3153 Alma we started to love our 'town', wanted to stay here, and were lucky enough to buy a home in South Palo Alto. We loved our new 'town' as soon as we got here and that's why we waited and saved up enough money for a down payment to be able to buy a home and stay here.

Of course my town has changed. I've written several stories for my Life Stories class at Avenidas about it. And what I liked so much about my town when we moved here is gone forever. I have to accept that fact, but I won't concede that all the CC's actions with ordinances, and approval of the Comprehensive Plan, is making progress for a better quality of life in my town. That too is ebbing away and getting worse. Of course I'll stick around for a while. I said that with hopes of a longer life. I am happy living in my bungalow in my village in SPA, a little enclave far removed from all the downtown madness and hubbub...traffic, parking, et al. Very little retail that I loved is there anymore.

Keep your powder dry on the state legislation re housing. If there's no incentive for builders to build...they won't build. Forget about ABAG. Toss it aside. The local dreamers think we can build all the units required for the individual income levels. I dream a lot too.

ADU's: Back off on Cory. He and I had some very strong disagreements on that issue but he was willing to come to my home and explain his position. I didn't like the outcome, but since I've read the first quarterly report I know it hasn't been an Armageddon experience. A little uptick on the number of units built, but some of those could have been built under the old rules. I will still push for knowing the reasons they were built...for real grannies, or as an income source to get the home buyers above water on their loans? Or as Airbnb units.

Posted by Down zone everything now
a resident of Downtown North
on Dec 6, 2017 at 5:21 pm

The only way to save Palo Alto is to elect anti-growth people next year to city council and then push to have the down zone across the city. No more commercial development to bring in workers (there are too many already) and only a small amount of housing growth due to the already overcrowded mess that is now Palo Alto and the Bay Area. This city council and prior ones have been on a mission to up-zone throughout the city and give bonuses, exceptions and the ability to trade zoning from one area to another. This shows up as buildings that are suppose to have a certain FAR (floor area ratio) actually having a much larger one when built.

We need massive down-zoning so with the bonuses that the state has promised the homes and buildings will still be a reasonable size.

Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Dec 6, 2017 at 7:05 pmOnline Name is a registered user.

@Curmudgeon, they refused to abide by ABAG's rules whereas PA refused to even consider rejecting them because of the fear of an ABAG lawsuit. With our current Mayor a newly elected ABAG VP, PA's getting out of ABAG seems even less likely than when I first started asking that question years ago.

"Under our state Constitution, if the Legislature or a state agency requires a
local government to provide a new program or higher level of service, the local
government is entitled to reimbursement from the state for the associated costs.
(Cal. Const., art. XIII B, § 6, subd. (a).)"

"Anybody know how enclaves of privilege (and the dwelling places of our developer class) like Atherton, Woodside, etc. plan to get around this, and if we can copy their dodges?"

@Curmudgeon, is this a trick question? ;-)
My understanding of ABAG housing requirements is that they are based on the number of jobs. Those enclaves of privilege fiercely guard their zoning policies and fend off corporate intrusion.

"Would ABAG sue Palo Alto for defying its edicts, but not Atherton, etc.?"

Even if Atherton etc were to be sued, they'd simply put their collective vast wealth to work - either to hire the best lawyers to fight the lawsuits, and/or to put or keep ABAG officials in their pockets, and/or to finance some "creative" solution.

Posted by Citizen PA
a resident of Another Palo Alto neighborhood
on Dec 7, 2017 at 10:17 am

"Under our state Constitution, if the Legislature or a state agency requires a
local government to provide a new program or higher level of service, the local
government is entitled to reimbursement from the state for the associated costs.
(Cal. Const., art. XIII B, § 6, subd. (a).)"

By the way, this will only happen if ordinary people -- who are concerned about safety, polluttion, traffic circulation, schools, the environment, commerce, and a whole host of other aspects of civic life damaged by inadvertently enabling companies to turn Palo Alto into company towns -- stand up and sue the state to pay for these consequences. It would allow cities on the Peninsula to bring to light the problems of being utterly laissez-faire in regard to the impact of corporations and making the consequences fall entirely to the public.

Posted by Curmudgeon
a resident of Downtown North
on Dec 7, 2017 at 9:03 pm

"My understanding of ABAG housing requirements is that they are based on the number of jobs."

A very silly criterion, given our highly job-mobile local workforce, unless they're going to force people to live in the same town they work in, which brings up some Orwellian social engineering issues regarding working couples and their families. This observation is directed at ABAG, BTW.

"Is it possible that I am even more cynical than you are? ;-)"

I'm not a cynic. I'm an objective observer. Tough distinction at times, tho.

"A very silly criterion, given our highly job-mobile local workforce, unless they're going to force people to live in the same town they work in, which brings up some Orwellian social engineering issues regarding working couples and their families. This observation is directed at ABAG, BTW."

Another way to look at that is that if every city provided enough housing to cover the jobs within its own city limits, then region-wide we'd have a jobs-housing balance whether or not any particular person lived and worked in the same city. Before allowing, oh, say, Palantir to add office space for 10,000 workers, city officials would have to consider whether and how they would add housing for those workers and their families. This might help them notice before-the-fact that their city just might struggle a little bit to accommodate that kind of explosive growth.

"I'm not a cynic. I'm an objective observer. Tough distinction at times, tho."

Fair 'nuff, and apologies for misrepresenting you. Speaking for myself, many years of objective observation have made me very cynical :-D

Posted by Curmudgeon
a resident of Downtown North
on Dec 8, 2017 at 12:14 pm

"Another way to look at that is that if every city provided enough housing to cover the jobs within its own city limits, then region-wide we'd have a jobs-housing balance whether or not any particular person lived and worked in the same city."

A bookkeeper's resolution, but still a horrendous commute situation twice daily as people convert from distribution by residence to distribution by occupation and back. An (oxymoron alert) intelligent ABAG would dictate how the jobs get distributed. Fir example, Palantir could as easily infest any community.

"A bookkeeper's resolution, but still a horrendous commute situation twice daily as people convert from distribution by residence to distribution by occupation and back."

Two factors prevent the most definitely desirable situation of everyone living close to work. Job mobility - people around here change jobs often, and moving house for each job change is so disruptive (especially for families with children in school), expensive and time consuming as to be de facto infeasible. Two-income households - in most cases, spouses/partners work for different employers in different cities so at least one of them needs to commute.

If the total regional housing is enough for the total regional jobs, then commutes are shorter and people have options.

" An (oxymoron alert) intelligent ABAG would dictate how the jobs get distributed. Fir example, Palantir could as easily infest any community."